Financial Review (continued)
Operating profit (beia)
Share of net profit of associates and joint ventures (beia)
Net finance expenses (beia)
Income tax expense (beia)
Net profit and net profit (beia)
Earnings per share - diluted
Exceptional items and amortisation of acquisition-related intangibles (eia)
O Q,
Report of the Executive Board
Report of the Supervisory Board
Operating profit (beia) was €3,868 million, up 6.4% organically, excluding €176 million negative foreign
currency impact and €43 million increase from consolidation changes. Growth was driven by higher revenue
and cost efficiencies which more than offset higher input and logistics costs.
Share of profit of associates and joint ventures (beia) increased €13 million organically to €161 million,
reflecting higher net profit from joint venture operations in India, Germany and Chile.
Net interest expenses (beia) increased by €31 million to €405 million. The average interest rate (beia) in
2018 was 3.2% (2017: 3.0%). Other net finance expenses (beia), which includes the impact of currency
revaluation on outstanding payables in foreign currencies, the interest expense on the net pension liability
and financing expenses related to discounted provisions, decreased by €79 million to €57 million.
The effective tax rate (beia) was 26.4%, lower than last year (2017: 27.6%) including some one-off tax benefits.
Net profit (beia) grew by €280 million organically to €2,424 million, an organic increase of 12.5%. The impact
of currency was negative by €116 million and consolidation changes had a positive impact of €14 million.
Reported net profit for 2018 was €1,903 million.
Earnings per share - diluted decreased to €3.34 (2017: €3.39). Earnings per share - diluted (beia) increased
by 8% from €3.94 to €4.25.
The table below presents the reconciliation of operating profit before exceptional items and amortisation
of acquisition-related intangibles (operating profit beia) to profit before income tax.
In millions of
2018
2017
Operating profit (beia)
3,868
3,759
Amortisation of acquisition-related intangible assets and
exceptional items included in operating profit
(731)
(407)
Share of profit of associates and joint ventures
210
75
Net finance expenses
(495)
(519)
Profit before income tax
2,852
2,908
Heineken N.V. Annual Report 2018
Financial Statements Sustainability Review Other Information
The table below provides an overview of the exceptional items and amortisation of acquisition-related
intangibles in HEINEKEN's net profit:
In millions of
2018
2017
Profit attributable to shareholders of the Company
(net profit)
1,903
1,935
Amortisation of acquisition-related intangible assets included
in operating profit
311
302
Exceptional items included in operating profit
420
105
Exceptional items included in net finance expenses/(income)
34
8
Exceptional items and amortisation of acquisition-related
intangible assets included in share of profit of associates
and joint ventures
(50)
78
Exceptional items included in income tax expense
(142)
(142)
Allocation of exceptional items and amortisation of
acquisition-related intangibles to non-controlling interests
(52)
(39)
Net profit (beia)
2,424
2,247
The 2018 exceptional items and amortisation of acquisition-related intangibles on net profit amount to
€521 million (2017: €312 million). This amount consists of:
- €311 million (2017: €302 million) of amortisation of acquisition-related intangibles recorded in
operating profit.
- €420 million (2017: €105 million) of exceptional items recorded in operating profit, of which nil in revenue
(2017: €20 million), €122 million of restructuring expenses (2017: €93 million), €183 million of impairments mainly
in the Democratic Republic of Congo (DRC) (2017: €19 million gain from reversal of impairments), €24 million
of acquisition and integration costs (2017: €72 million), €4 million net gain on disposals (2017: €71 million
net gain mainly from the sale of non-beer and cider wholesale operations in the Netherlands) and €95 million
of other exceptional expenses (2017: €10 million which included exceptional benefits of €58 million).
- €34 million (2017: €8 million) of exceptional items in net finance expenses, mainly related to interest over
tax liabilities and interest expenses of the pre-financing of acquisitions.
- €50 million of exceptional net benefits and amortisation of acquisition-related intangibles included in share
of profit of associates and joint ventures, mainly related to the early termination of a brand licence by CCU
S.A. in exchange for cash and a portfolio of brands in Argentina (2017: €78 million expense, which included
loss on previously-held equity interests and the recycling of foreign exchange from equity to profit and loss).
- €142 million (2017: €142 million) in income tax expense, which includes the tax impact on exceptional
items and amortisation of acquisition-related intangible assets of €115 million (2017: €97 million) and an
exceptional income tax benefit of €27 million (2017: €45 million, mainly for remeasurement of deferred
tax positions following a nominal tax rate change in the United States).
- Total amount of eia allocated to non-controlling interests amounts to €52 million (2017: €39 million).